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THE SCENARIO
I'm looking to buy a house, fix it up, and sell it for a profit. I'll buy the house for $260,000 and put $52,000 of my own money as the down payment. I plan to finance the purchase and the renovation with a short-term loan at a high interest rate (called a 'hard money' loan). The terms of this loan are as follows: $258,000 total borrowed ($208,000 for the house and $50,000 for renovations), $1,827.50 monthly interest-only payment, $6,650 in fees and points due at the end, and a maximum of 12 months to repay.
The question: If I pay $260,000 for the house initially, and fix it up with the $50,000, and sell it in 12 months, what does my sale price need to be in order to make 15% on my money? Assume ...
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